The probability of a rate hike at the FOMC's September meeting stands at 0%. The probability does not inch higher than 50-50 until its December meeting when Fed funds rate price in a 57% probability of a rate hike.
However, the Treasury yields are contradicting the Fed funds rate. The 2-year yield, which mimics short-term interest rate expectations, rose to a high of 0.739%; up almost 4 basis points since the Fed decision yesterday.
In its statement, the FOMC both declined to raise interest rates or provide any clues about when a hike is on the way. Still, many believe the Fed did provide a jobs clue that a rate hike is getting closer by stating that “some more” improvement in the labor market could open doors for a rate hike.
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